Summary
- When the lender advertised the sale of the partnership interests, the borrowers moved to enjoin it, arguing that allowing a mortgagee to proceed in that fashion amounted to an impermissible “clog” on their equity of redemption.
Opinions Matters
Summary of Selected Recent Legal Opinions in Real Estate Transactions Committee Community Discussion Activity, August 2019-December 2019
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This summary of Legal Opinions in Real Estate Transactions Committee Community Discussion activity does not necessarily represent the views of the Committee, but rather reflects views of individual members of the Committee on current practice topics. The comments referred to below may be viewed by members of the Committee at the Real Property Finance Group’s Community “Discussion” web page.
1. Remedies Opinion Regarding Representations and Warranties by Borrower. Pete Ezell, Nashville, TN, reported that in-house counsel for an insurance company lender requested that the remedies opinion cover a Certification of Borrower that contained only representations and warranties and did not include any undertakings or remedies. Borrower’s counsel cited footnote 65 from the 1988 TriBar Report, Third-Party “Closing” Opinions, 53 Bus. Law. 591, 620 n.65 (1998) (“Representations are not undertakings and, therefore, are not covered by the remedies opinion. The opinion does cover, however, any remedies specified in the agreement for a false representation or warranty.”). Lender’s counsel was not convinced and claimed lender routinely received remedies opinions on the Certification, and Borrower’s counsel requested thoughts from Committee members.
The respondents agreed that the remedies opinion should not cover the Certificate or any other non-contracts, such as UCC financing statements. Charles Menges, Richmond, VA, noted that the Certificate could be covered by the “authorized, executed, and delivered” opinion(s) and that the fact the opinion recipients claim to receive such opinions is not persuasive. See Guidelines for the Preparation of Closing Opinions, 57 Bus. Law. 875, 876 §1.6 (2002) (“An assertion that a specific opinion is ‘market’--i.e., that lawyers are rendering it in other transactions--does not make it appropriate to request or render such an opinion if it is inconsistent with these Guidelines.”).
Members of the Committee on Legal Opinions in Real Estate Transactions are encouraged to raise legal opinion issues on the Real Property Finance Group’s Community “Discussion” web site and to participate in the exchanges. Members also are encouraged to bring new developments (such as recent case law or newly identified issues) to the attention of Committee members through that site.
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